Tiffany & Co. reported that net sales rose 15 percent to nearly $620.9 million in the first quarter, ended April 30. Growth was geographically broad-based, with the exception of Japan. On a constant-exchange-rate basis which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales increased 14 percent and worldwide comparable store sales rose 8 percent.
Net earnings in the first quarter rose 15 percent to $49.6 million from $43.1 million a year ago.
Sales by channel of distribution were as follows:
* U.S. Retail sales rose 15 percent to nearly $298.7 million, primarily due to increased spending per transaction. Comparable store sales growth of 12 percent was achieved through a 26 percent increase in the New York flagship store and a 9 percent increase in branch store sales. Results from six new stores opened in the past year meaningfully contributed. The company opened a store in Austin, Texas, in the first quarter and operated 65 stores at the end of the period.
* International Retail sales rose 15 percent to $248 million. On a constant-exchange-rate basis, sales rose 13 percent (4% on a comparable store sales basis) due to growth in most international markets except Japan. Tiffany added a net of three company-operated retail locations, including three in Japan (and closed two), one in Korea, and one in Singapore, and operates 106 international stores and boutiques at quarter-end.
* Direct Marketing sales rose 11 percent to $33.3 million due to growth in both the number of orders and in the average amount spent per order.
* Other sales increased 22 percent to nearly $40.9 million. The increase was due to a $5.2 million increase in wholesale sales of diamonds, as well as growth in the Company’s specialty retail sales at Little Switzerland and Iridesse stores.
“We are pleased to start 2007 with these results and excited about our plans for the full year,” said Michael J. Kowalski, chairman and chief executive officer. “We will increase the number of our company-operated Tiffany & Co. locations by approximately 10 percent, and introduce a wide range of new product designs.”
He added, “We are now one month into the second quarter and sales in May are achieving our overall expectation. Strong sales growth in the U.S. and in most international markets is offsetting continued weakness in Japan. Based on our planned initiatives and a continued favorable retail environment, our full year 2007 expectation now calls for approximately 12 percent sales growth.”
Separately, the Company plans to launch a significant expansion of its wholesale distribution of Tiffany & Co. watches in 2008 in major U.S. and international markets.
“Tiffany has developed a very strong, competitive watch assortment in the past several years, always with a long-term objective to increase watch sales as a percentage of our overall business,” Kowalski said. “We are now well-positioned to take the next step in this evolution, and believe that expanding our distribution through other fine jewelry and watch retailers will enable us to build customer awareness and generate meaningful incremental sales growth.”